Dubai rental market 2026: One-bedroom apartments lead demand, villas fall 11% and new leases beat renewals

Dubai: Several residential areas in Dubai topped the rental market during the first nine months of this year, benefiting from a variety of real estate options, integrated infrastructure, and proximity to business and service centres, while an analysis by FAM Properties showed that new contracts led the growth of the residential rental market in Dubai. According to an analysis conducted by FAM Real Estate, the five largest areas, in terms of the number of rental contracts, recorded approximately 114,300 contracts during the period from January to September 2026, led by Al Warsan First, Jebel Ali First, and Al Barsha South Fourth, while Business Bay and Dubai Marina emerged as the most prominent residential destinations, supported by their vital location and the availability of facilities and transportation networks. Outside of the five areas, the analysis showed that Al Hebiah Second recorded the highest growth rates in rental contracts within the newer residential complexes, with a growth rate of 47.6% year-on-year during the first nine months of 2026, while Al Hebiah Fifth came in second with a rate of 26%, followed by Wadi Al Safa 3 with a growth of 25.7%, while Dubai Creek Harbour saw a growth rate of 16.8%, Sheikh Mohammed Bin Rashid Gardens 12.9%, Nad Al Sheba First 11.7%, and Al Merkadh 11.1%. Various options available FAM Real Estate CEO Firas Al-Masdi said that the strongest demand for rental properties is concentrated in established residential complexes. Picture credit: Supplied FAM Real Estate CEO Firas Al-Masdi said that the strongest demand for rental properties is concentrated in established residential complexes that offer a mix of diverse options, easy access, and relatively flexible price ranges. He added that these areas include Al Warsan First, Jebel Ali First, and Al Barsha South 4, with a large residential stock that attracts a wide base of tenants, while the Business Bay and Dubai Marina areas benefit from their proximity to vital business centres, transport networks, and integrated service facilities. He continued: “These figures reflect the depth of the rental market in those locations, as areas that offer a wide variety of apartments and have a well-established infrastructure are able to achieve high trading volumes, given their ability to meet the needs of different segments of tenants, rather than relying on only one category of demand.” Al-Masdi explained that the buildings that were recently completed in the areas that recorded the highest growth rates in rental contracts within the newer residential complexes have contributed to providing new rental units in the market. He said: “In any case, the growth came as a result of new lease contracts, not the renewal of existing contracts, as new lease contracts more than doubled in the Al Hebiah 2 area by 107%, and increased by 73% in the Wadi Al Safa 3 area, as tenants moved to newly delivered buildings.” He continued: “Among the larger rental markets, Al Barsha South Fourth (Jumeirah Village Circle) recorded the largest increase in the number of contracts in absolute terms, followed by Al Barsha South Third and Al Merkadh.” New residential communities The analysis revealed that the fastest growth is concentrated in new residential communities that have recently seen the handover of a large number of units and are now entering the rental market. A prime example is Al Yufrah 1, which recorded a 144% year-on-year increase in rental contracts during the first nine months of this year, with new leases nearly tripling after the handover of approximately 1,290 residential units since the beginning of 2025. In the Umm Suqeim Third area, contract registrations increased by 48%, and the Al Hebiah 2 area also recorded growth of 48%, with new rental contracts more than doubling after the completion of some real estate development projects. Al-Masdi confirmed that this increase is due to two main factors, the first of which is the supply side, as many of the residential units that were purchased off-plan during 2022 and 2023 have now been completed, and investors have started offering them for rent. Therefore, the growth in all these areas is due to new lease contracts, and not to the renewal of existing contracts. He said the second factor is value, as the average rent for villas in those areas, most of which consist of four or five bedrooms, is about Dh150,000 per year, compared to an average of Dh270,000 for four-bedroom villas across Dubai as a whole. Tenants' budget The analysis showed that new tenants in Dubai usually tend to rent apartments ranging in size from a studio to a two-bedroom apartment, with an annual budget ranging approximately between Dh45,000 and Dh110,000, with these residential units representing nearly nine out of every 10 new rental contracts. During the first nine months of 2026, the average value of new leases was Dh45,000 for a studio, Dh70,000 for a one-bedroom apartment, and Dh110,000 for a two-bedroom apartment.